The long-term care sector, encompassing everything from assisted living to skilled nursing, is showing robust signs of recovery, fueling “cautious optimism” among investors and lenders for 2025, according to a recent report by Newmark. This resurgence is driven by increasing occupancy rates and rising rental rates, signaling a significant turnaround from pandemic-era challenges.
Newmark’s 2025 Valuation & Advisory (V&A) North American Market Survey, a detailed analysis of the industry, highlights that many communities have successfully returned to pre-pandemic occupancy levels in 2024. This recovery is particularly notable as “the long-term care market now has more units occupied than at any point in history,” as stated in the report. This surge is attributed to the successful lease-up of new communities that came online during the pandemic.
One key factor driving this positive trend is the aging baby boomer population. “The oldest baby boomers, those born between 1946 and 1964, turning 79 this year and ‘just entering the prime years for entrance into a senior living community,'” the report notes. This demographic shift is expected to sustain the demand for long-term care services.
“We are seeing a clear demographic tailwind that is supporting the sector,” said a senior analyst at Newmark in the report. “However, operational efficiency and quality of care remain paramount for sustained profitability.”
Key Statistics and Insights:
- Occupancy Surge: The report indicates that the market has “more units occupied than at any point in history.” This reflects the successful lease-up of new communities and the return to pre-pandemic occupancy levels.
- Rental Rate Increase: To offset rising operational costs, including increased wages and inflation, rental rates are on the rise. This adjustment is crucial for maintaining financial stability in the sector.
- According to the CDC’s National Center for Health Statistics, “In 2020, about 1.3 million residents were living in nursing homes.” This statistic gives context to the size of the industry, and the potential impact of the baby boomer generation on the number of residents in the coming years.
Operational Challenges and Opportunities:
While the outlook is positive, challenges remain. Operators must focus on improving efficiency and delivering high-quality care at competitive prices to sustain growth. The report also anticipates that expenses will stabilize in 2025, providing some relief to operators facing rising costs.
Looking Ahead:
The long-term care market is poised for continued growth, driven by favorable demographics and a recovery in occupancy rates. However, success will depend on operators’ ability to navigate operational challenges and adapt to evolving industry trends.